Wednesday, January 07, 2009

Global poverty: how it could be transformed

The book The Silver Bullet by Fred Harrison is a tour de force. It is a must-read for anyone trying to understand why global poverty is so enduring. Be warned though that it will probably generate a lot of frustration in readers because of the blindness of the target audience of global poverty campaigners who need to benefit from its incisive forensic insights. The index is excellent.

Harrison shows that the current neglect of key issues by such world famous advisers such as Jeffrey Sachs and Joseph Stiglitz, will prevent poverty being tackled with any sort of effectiveness. He shows their ignorance of an effective appreciation of how land and natural resources should be handled to benefit a nation. He also shows how Sachs, and Paul Collier with Anke Hoeffler (Oxford Univ) deduce the strange theory that a nation rich in land and natural resources will have problems in promoting democracy and poverty reduction. To cap it all, the bizarre term ‘resource curse’ is being used to promulgate this abysmal theory. They propose that taxes for national investment in public services should be raised from incomes and capital rather than using some of the value of land and other natural resources for the self-funding of those facilities. This is rank neo-colonialism. Western countries can now justify their exploitation with such ideas from such ‘experts’, and extract the very wealth from needy countries that should be raising their citizens from poverty. Sadly the gurus continue to peddle their false theories despite, in the case of Sachs, Bolivia's GDP per head remaining static even after 20 years of trialing his advice. What is being played out here is the old colonial idea of raising tax from people’s work and creativity but leaving most of the ever-growing wealth of land and natural resources in the hands of elites.

Harrison’s answer is that public goods such as schools and roads should be created by government and become self-funded from the rents of land in the nearby areas, as land becomes more desirable following the investment. What is wanted is good stewardship of the resources to benefit all, rather than to succumb to the fatalistic and extraordinary diagnosis of: ‘resource curse’. To see a recent YouTube film by Harrison on Zimbabwe as to how that country has been dogged by these false theories, go to: Why Mugabe killed a nation [ See also, 2016 link to Prof Steve Keenhttp://uk.youtube.com/RenegadeEconomist ]